Hurricane Sandy, the perfect storm or “Frankenstorm,” is expected to leave billions in damages along its wake as it ravages through the Northeast. When the markets start trading again, sector exchange traded funds investors will have to keep an eye on a couple of key areas.
Trang Ho for Investor’s Business Daily outlines five sectors that could take the brunt of the damage.
Homebuilders. According to CoreLogic, almost 284,000 residential properties across seven states lie across Sandy’s path. The sector may benefit the most as home owners repair damages.
- Shares Dow Jones US Home Construction Index Fund (NYSEArca: ITB)
- SPDR S&P Homebuilders (NYSEArca: XHB)
Airlines. Currently, observers estimate between 9,000 to 12,600 flights cancelled as airliners grounded flights because of mother nature. According to the Global Business Travel Association, storm-related cancellations could cost the industry $606 million in lost spending and up to $58 million per day in lost revenue in the 11 East Coast states.
- Guggenheim Airline ETF (NYSEArca: FAA)
Insurance. James Shanahan, an equity research analyst at EdwardJones, projects that the storm will cause $5 billion to $10 billion in damages. While insurance companies have already been trading down ahead of the storm, Shanahan believes that the hurricane will have a positive impact since insurers will raise premiums. [‘Frankenstorm’ May Create Headwinds for Insurance ETFs]
- SPDR KBW Insurance ETF (NYSEArca: KIE)
- iShares Dow Jones US Insurance Index Fund(NYSEArca: IAK)
- PowerShares Dynamic Insurance Portfolio (NYSEArca: PIC)
Energy. As oil refineries shut down, oil and pump prices are expected to rise. However, lower consumer demand due to the storms may also offset significant price increases. [Four ETFs for an Oil Rebound]
- United States Gasoline (NYSEArca: UGA)
- iShares Dow Jones U.S. Oil & Gas Exploration & Production (NYSEArca: IEO)
Retail, Consumer Staples. “While hurricanes and other natural disasters are extremely negative for wealth, they are usually positive for growth,” Jason Schenker, president of Prestige Economics, said in the Investor Business Daily article, “whether it is the last-minute run to hardware stores and supermarkets, or after-the-storm replacement of furniture, windows, cars, and other damaged durable and nondurable goods.”
- SPDR S&P Retail (NYSEArca: XRT)
- SPDR Consumer Discretionary Select Sector Fund (NYSEArca: XLY)
- SPDR Consumer Staples Select Sector Fund (NYSEArca: XLP)
For more information on market sectors, visit our sector ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.